Given: Determine: Initial Program Under initial program Sales (20,000 units) Variable Expenses Fixed Expenses $795,000 $425,000 $230,000 Alternate Program #1 (AP1) Unit price: Unit variable expense: Contribution margin: Unit contribution margin: Net income: Break-even point: Margin of safety in dollars: Margin of safety as a percent of income: Operating leverage: Quantity to reach target profit of $500,000: Quantity to reach target profit of $1,250,000 Quantity to reach target profit of $2,000,000 Sales increase 5,000 units Add $200,000 fixed expenses Alternate Program #2 (AP2) Sales increase 20,000 units Add $16 variable expenses per unit Under AP1 Alternate Program #3 (AP3) Contribution margin: Net income/profit: Break-even point: Margin of safety in dollars: Sales increase 18,000 units Add $4 variable expenses per unit Add $80,000 fixed expenses Under AP2 Under AP2 Alternate Program #4 (AP4) Contribution margin: Net income/profit: Break-even point: Margin of safety in dollars: Sales increase 9,000 units Subtract $8 variable expenses per unit Add $45,000 fixed expenses Under AP3 Alternate Program #5 (APS) Sales decrease 4,000 units Subtract $2 variable expenses per unit Add $15,000 fixed expenses per unit Contribution margin: Net income/profit: Break-even point: Margin of safety in dollars: Under AP4 Contribution margin: Net income/profit: Break-even point: Margin of safety in dollars: Under APS Under AP5 Contribution margin: Net income/profit: Break-even point: Margin of safety in dollars: Rank the programs (incl. Initial) in order of profitability 1 Nga